Striking a final chord

Published 4:00 am, Tuesday, September 10, 1996

In a weakened market for piano retailers, Sherman Clay & Co. said Monday it was seeking a buyer for its stores, which sell and rent pianos as well as offer music lessons.

The 126-year-old San Francisco institution, the nation's largest piano retailer, plans to sell its remaining nine locations by the end of the first quarter next year. The locations for sale include stores in San Francisco, Oakland, Santa Clara, Phoenix, Houston, the Seattle area and Portland.

However, Sherman Clay, which employs 140 workers, said it planned to retain its financing business, which lends money at varied interest rates to customers buying pianos.

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"We want to sell the business in its entirety as a going concern," said Sherman Clay Chief Executive Eric Schwartz, whose family has owned the piano company since 1960. "It's not a distress sale. . . . We want to sell it to a buyer who will maintain the standard of service and integrity people have come to expect from Sherman Clay."

Schwartz noted that although the privately held Sherman Clay had consistently posted profits throughout the years and recorded revenue of $40 million last year, he and his family had decided to refocus their business strategy.

"While we certainly have mixed emotions as we explore the sale of Sherman Clay," he said, "the family has decided that it would like to concentrate its time and capital on other business interests and investment activities."

The other family businesses include a paper mill in Vermont and strip malls in California, Texas, Oklahoma, Washington and Oregon.

Schwartz, who noted that Sherman Clay was also in the process of closing five locations in Southern California as well as one store each in Sacramento, Eugene, Ore., and Houston, said he was hoping all of the company's employees would find jobs with the new owner.

"We're looking for someone who's going to recognize the value of our employees in playing a role in the success of our company," Schwartz said.

But despite his rosy forecasts about Sherman Clay's future, nationwide sales of pianos have been increasingly sluggish.

According to industry statistics, the number of pianos sold in the United States dropped from 282,000 in 1978 to 99,000 in 1994. Television, computer games and other technological advances, industry experts say, have overtaken the homespun attraction of pianos.

And like other piano retailers across the country, Sherman Clay increasingly has been feeling the pinch. Since the late 1970s, the company has been selling off or closing stores. In January 1983, Sherman Clay had 43 stores across the country. By January 1994, the company had 23.

"Demographically, our markets have changed," Schwartz said. "To be in retail and to be successful, you have to move with your customers."

But some industry members say weakened demand for pianos was just one of the factors that led Sherman Clay to sell its business.

Joseph Brattesani, president of San Francisco-based Colton Piano & Organ and a former manager at Sherman Clay, believes the company has not been well run.

Poor management alleged

"It has unbelievably poor management," said Brattesani, who noted that Schwartz was often out of town.

"They've lost a lot of good people."

Roy Larrick, owner of Larrick Piano and Organ in Sacramento, noted that Sherman Clay tended to sit on its laurels and not aggressively sell pianos.

"They're not in touch with reality," he said. "It takes aggressive sales and promotions to be in our business today."

As a result, Brattesani said, Sherman Clay has lost a number of key contracts with major brands such as Steinway because the company couldn't sell enough pianos.

Schwartz acknowledged that Sherman Clay had indeed lost its right to sell Steinways at its stores in the Los Angeles area and Sacramento, but said he believed it had not hurt his company's business. "We just replaced them with other brands," he said.

Larrick is also skeptical about whether the buyer will keep the company as a piano retailer.

"People aren't standing in line'

"When you sell your business or change locations, piano brands can't be transfered automatically," he said, noting that the new buyer would have to obtain new contracts with piano manufacturers. "And in our industry, people aren't standing in line to buy piano stores."

Schwartz downplayed the naysayers. "Their skepticism is not warranted," he said. "We feel confident these are great piano store locations."

Sherman Clay was founded in San Francisco in 1870 by Leander Sherman and Major C.C. Clay. Bernard Schwartz, Eric's father, bought the company in 1960 and turned it into a national chain. The landmark Sherman Clay building on Kearny Street was constructed just after the 1906 earthquake. That store moved to Mission Street two years ago. &lt;